Denmark’s current account surplus revised upwardly, may decrease slightly in coming years

Denmark’s current account surplus has been upwardly revised for 2015 by DKK 46.2 billion, equivalent to a 33 percent rise. This comes to a surplus of around 9.25 percent of the GDP. For the January to July period of this year, the surplus increased by DKK 36.6 billion. The surplus level gas usually been revised upwards, particularly since 2010.

For the period between 2010 and 2014, the revision was due to an increased surplus on the trade balance. The higher surplus in 2015-2016 comes from a higher surplus on both primary income and goods balance, said Danske Bank in a research note.

The increased surplus in trade balance is predominantly because of greater export of goods. The surplus has been revised because of Danish companies’ sales of goods produced abroad. Trade in merchanting, which is resale of goods abroad without any processing, could come to over half of the revision in the surplus on the goods balance in the previous years.

However, the sale of goods abroad after processing has also risen considerably in the earlier years and accounts for a huge part of the revision.  For the 2010-2014 period, the surplus on services has been downwardly revised mainly because of a huge import of manufacturing services charges for the use of intellectual property and rights, stated Danske Bank.

Also, primary income has been largely revised. This comes from the inclusion of information from firms’ annual reports from 2015. Primary income from 2015, so far, has been based on Danish central bank’s estimation. The new figures contribute additional DKK 16.9 billion to last year’s surplus and DKK 12.4 billion so far in 2016, noted Danske Bank.

In the coming years, current account surplus is expected to drop slightly, along with increasing business investments and thus imports, according to Danske Bank. Therefore, the huge surplus is mainly of a structural nature and is likely to remain large.